Introducing Social Rental Agencies in Poland
Lack of affordable homes is one of the main causes of the housing crisis in Poland. Property prices are too high in relation to average income and supply of rented houses is too low.
At the moment, the rental market in Poland is underdeveloped, making up just 16 percent of the entire housing market. Half of it is social housing available only to the very low-income earners. In other EU countries, rental market is around 40-60% of the market. In partnership with the University of Warsaw and the University of Silesia, Habitat for Humanity Poland carried out a research to examine feasibility of a social rental model and pilot test it.
What is a Social Rental Agency?
A social rental agency model involves private renters as providers of affordable housing units. Social Rental Agency is a non-profit intermediary that negotiates between property owners and households in need of housing. To the owners, it guarantees regular rent payments and proper use of the housing unit in exchange for a discounted rent. For tenants, it offers long-term and affordable leases, up to 10 years, and apartments in good conditions.
In addition, the Social Rental Agency offers social support to the tenant to prevent defaulting on monthly payments and accumulating debt. Social rental specialists are responsible both for the rent administration and social services support.
Habitat Poland estimates that as many as 30,000 apartments in Poland can be leased via social rental agencies. This number includes unused apartments which currently stand empty in bad conditions. These units can be renovated and leased to those who cannot afford commercial rents and at the same time do not qualify for social housing.
Social rental agencies target low-income earners, young people who are staring independent living and families with children – those who cannot access credit and cannot afford private rents. On the other side, the model offers set income to the owners who do not want to take on risks associated with letting their property on the market and hence their property stands vacant.
The social rental agency model can be regulated by the Tenants’ Rights Act and local municipalities can coordinate the work of the agencies. To ensure financial sustainability, Habitat Poland developed instruments to cover the costs of social rental specialists and establish an insurance fund to cover the costs when tenants default on repayments or need an extension.
How can it work?
The definition of social rental agencies was written into the National Housing Fund Act. Social Rental Agencies are defined as ‘institutions mediating between landlords and tenants that fulfill specific economic and social criteria.’ In addition, the government has agreed to introduce grants to establish Social Rental Agencies. They will be launched in the second half of 2017 and target NGOs and local governments. Grants will be administered by the ministry of development with the use of the EU funds.
In Poznan, this research inspired local authorities to set up a municipal rental agency later this year. The agency will rent apartments from private owners at a lower price to tenants who qualify for social housing but at the moment cannot be offered such a unit. The city will cover the costs of the agency and the difference in rents paid to the apartment owners by the tenants.